Oil prices declined for a second consecutive session on Tuesday, weighed down by growing fears of oversupply and ongoing trade tensions between the U.S. and China, the world’s two largest consumers of crude.
Brent Crude futures slipped 30 cents, or 0.49%, to $60.71 a barrel as of 07:46 GMT. West Texas Intermediate (WTI) for November delivery, which expires Tuesday, dropped 29 cents, or 0.5%, to $57.23. The more active December contract fell 31 cents, or 0.54%, to $56.71.
Contango signals ample supply
Prices reached their lowest levels since early May on Monday as escalating trade frictions fueled concerns over slowing global growth and softer oil demand.
Both WTI and Brent have now shifted into contango — a market structure where near-term prices trade below longer-dated contracts, typically a sign of abundant supply and weakening consumption.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, are pressing ahead with production increases, heightening fears of a surplus. Analysts expect the imbalance to continue into next year, while the International Energy Agency recently projected a global surplus of nearly 4 million barrels per day by 2026.
“The continued weakening of Brent’s monthly spread structure indicates that the pressure from oversupply in the crude oil market is gradually materializing,” analysts from China’s Haitong Securities wrote in a note on Tuesday. “This will dampen market expectations and curb investors’ willingness to chase gains, limiting the potential for oil prices to rebound.”
Forecasts turn more bearish
Market sentiment has turned more negative, with several banks lowering their price outlooks. Goldman Sachs analysts said on Tuesday they now expect Brent to drop to $52 a barrel by the fourth quarter of 2026, citing growing evidence of a global glut.
According to the bank, “the long-anticipated global surplus has started to show” in satellite inventory data and official figures from the U.S. Energy Information Administration and the IEA.
Despite the bearish outlook, investors see potential support if trade relations improve. A meeting next week between Donald Trump and Xi Jinping in South Korea could offer some relief to prices, though core issues such as tariffs, technology, and market access remain unresolved.
“As long as there’s no new bearish news, oil prices have a natural need to rebound from oversold levels. At present, if there are expectations of improvement in China–U.S. economic and trade talks, the probability of a rebound increases,” said Yang An, analyst at Haitong Securities.
Inventory data in focus
Traders are closely monitoring inventory levels for further clues on near-term direction. A preliminary Reuters survey suggested that U.S. crude stockpiles likely increased last week, ahead of reports from the American Petroleum Institute and the EIA scheduled for later this week.